Structural shortage of imported cotton yarn continues

In the first half of September, cotton yarn imports and the destocking both reached the highest point recently. The overall inventory kept at around 50% of previous year, and structural shortage of imported yarn continued. Firstly, the delivery has always been delayed as cotton prices were continuously high in Southeast Asia and the operating rate of many cotton yarn mills moved down. Secondly, domestic stocking of some varieties such as low-count open-end yarn was obviously insufficient as the usage for that was large recently, and product allocation was more difficult. Thirdly, Chinese market couldn’t accept buying Indian cotton prices with high prices, making Indian combed yarn basically out of stock. Now the price spread between forward imported yarn prices and domestic one has gradually recovered. However, the profit of traders are hard to ensure. In short term, imported yarn will still mostly focus on destocking slowly.